For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).
Editor’s Comment and Analysis: AIG correctly decided not to try to bite the hand that saved it when it refused the demand of Hank Greenberg to join in his lawsuit against the government. Greenberg, some will recall, was forced out of AIG in a scandal in 2005.
Now AIG is attempting to open the door to suing banks besides the suit it already filed against Bank of America for selling them worthless trash instead of high rated bonds that were safe and verified. But the Fed created Maiden Lane II stands in the way even though it has already wound down its affairs.
The argument is that AIG transferred its litigation right to Maiden Lane. So the question is whether that was standard procedure and did the maiden Lane entities get such a transfer of litigation rights on ALL the debts that were “contributed” to the Maiden Lane entities. While this particular suit has more to do with life insurance than mortgages, it has far reaching implications.
The questions raised by all these “transfers” is who transferred what to whom, when and what did the Maiden Lane entities actually get in terms of legal title to something. If they did get legal title to either the bogus mortgage bonds or the loans themselves, then why are there foreclosures in the name of other entities?
And if these entities were given the opportunity to dump the bad bonds or loans onto the Fed and be bailed out 100 cents on the dollar, then why is there any balance in any loan receivable account relating to the origination of ANY loan involved in the Fed transfers?
The can of worms covered over by the Maiden Lane transactions is deep and ugly. Similar transactions occurred all over Wall Street as some parties received 100 cents while others were left out in the cold — especially investors who put up the money to originate the financial transactions in the first place.
As a practice hint, I would say that you should inquire as to whether the subject loan is claimed to be part of an alleged investment pool that issued mortgage-backed bonds and which delivered ownership in indivisible shares in the underlying mortgages.
If yes, then you should inquire as to whether any or all of the bonds were the subject of a transfer to any of the Maiden Lane entities or some other party. This would jive with what I am told is the fact that more than 50% of the REMIC trusts have long since ceased existence in any way, manner, shape or form.
Then you should inquire as to whether the subject loan was included in said transfer and if so, the how? Assignment, indorsement, etc. And you should inquire about the amount of money received for the transfer, how and when it was paid and production of copies of said payment.
The point here is that the parties who are initiating the foreclosures are (a) complete strangers to the transaction having neither funded nor purchased the receivable or loan and (b) that even if they were at some point owners of the loan, they transferred it out for payment which mitigates the loss and the balance due on the loan receivable account. If Maiden Lane II is winding down as reported, where did the loans go from there? The answer from inside Wall Street was they were “re-securitized” into new trusts, all private label away from the sight of investors, borrowers and regulators.
In the end, the result I am after here is that the loan was paid down in whole or in part and the complexity of the way the banks were bailed out is not a license to receive yet another windfall. The parties who paid have a right of contribution and perhaps a right to foreclose the mortgages.
But without the identity of the current real creditor, compliance with HAMP and other programs is impossible because you need the injured party at the table.
A party who once held the receivable but was paid should not be receiving a second payment or a free house through foreclosure just because they have presented part of the deal. Discovery should include ALL of the deal, which is why the Master Servicer should be the target of your investigations including the parent investment banking firm.
Goldman and other banks are reporting record profits resulting not from lending but from trading activity, which is the way I have said from the beginning that they would repatriate the money they stole is increments so that the value of their stock would appear to be worth more and more.
But think about it. What other managed fund is getting such bountiful results? Answer: NONE. That indicates to me that the proprietary trading is a ruse in which the banks are claiming profits derived from trading with funds obtained illegally and parked off shore. By controlling the transactions end to end, they can simply set the amount of profits they want to report and continue on for a long time considering estimates of anywhere from $3-$10 trillion that has been siphoned out of the world economy and for which there has been no accounting or accountability.
These are funds that SHOULD be credited to investors and the loan receivable accounts of borrowers.
Since the summer of 2011, the insurance giant American International Group has been battling Bank of America over claims that the bank packaged and sold it defective mortgages that dealt A.I.G. billions of dollars in losses.
Now A.I.G. wants to be able to sue other banks that sold it mortgage-backed securities that plunged in value during the financial crisis. It has not said which banks, but possibilities include Deutsche Bank, Goldman Sachs and JPMorgan Chase.
But to sue, A.I.G. first must win a court fight with an entity controlled by the Federal Reserve Bank of New York, which the insurer says is blocking its efforts to pursue the banks that caused it financial harm.
The dispute illustrates the web of financial instruments that A.I.G. and the federal government became tangled in as the insurer nearly collapsed in 2008 and required a vast taxpayer bailout. It also shows the complexity of apportioning blame, five years after the financial crisis, and making wrongdoers pay for their share of the harm.
According to a lawsuit filed Friday, A.I.G. is seeking a declaration from a New York state judge that it has the right to pursue “billions of dollars of fraud and other tort claims that exist against numerous financial institutions,” even though Fed officials have said A.I.G. gave up that right.
“If I were the general counsel of A.I.G., I would seek this kind of declaratory judgment,” said Henry T. C. Hu, a former regulator who is now a professor at the University of Texas School of Law. “I don’t know whether I’d win, but it’s certainly worth trying.”
Much of A.I.G.’s rescue was needed because it didn’t have money in 2008 to cover guarantees that it sold banks in case the complex securities in their portfolios defaulted. But the latest dispute centers on a less familiar part of the bailout — the part in which reserves were removed from A.I.G.’s life insurance units and replaced with what turned out to be troubled mortgage securities.
The securitized housing loans lost value so fast when the bubble burst that some of A.I.G.’s life insurers risked being shut down by state insurance regulators. The Fed stepped in instead, and A.I.G.’s current lawsuit centers on the relationship that formed between the insurer and its rescuer as a result.
The Fed paid about $44 billion to extricate A.I.G.’s life insurance units from soured trades, and set up a special entity, Maiden Lane II, to buy the plunging mortgage securities for $20.8 billion. Those securities had an original face value of $39.3 billion.
Maiden Lane II is the sole defendant in A.I.G.’s lawsuit. The complaint says that at the moment Maiden Lane II bought the securities, it locked the insurance units into an $18 billion loss — the difference between the securities’ face value and their price in late 2008, arguably the bottom of the market. A.I.G. attributes a large chunk of its losses to the mortgage securities that it bought from Bank of America. It sued the bank for $10 billion in August 2011.
But one of Bank of America’s defenses is that A.I.G. lacks standing, having given its litigation rights to Maiden Lane II.
Last month, for instance, two senior Fed officials submitted declarations saying they believed that as part of the sale of assets to Maiden Lane II, A.I.G. had agreed not to go after any of the banks.
That prompted A.I.G. to file its suit, arguing that when it sold the tainted assets to Maiden Lane II, it did yield some litigation rights, but not the ones giving it the right to bring fraud complaints against the banks that put the securities together.
A.I.G. said those banks had misled its life insurance and money management businesses regarding the quality of the securities, and “obtained artificially high credit ratings” so the securities would pass the life insurers’ investment rules.
A.I.G.’s lawsuit is separate from one that until late last week it considered joining, which argued that the New York Fed acted unconstitutionally during the bailout, harming the insurer’s shareholders.
That lawsuit was filed in 2011 by Maurice R. Greenberg, a former chief executive of A.I.G. and a major shareholder. Mr. Greenberg had hoped the company would join the lawsuit, but the possibility that A.I.G. would sue its rescuer drew sharp criticism and A.I.G.’s board decided against it.
The new suit isn’t seeking financial compensation from the Fed.
The New York Fed, which has sole control of Maiden Lane II, declined to discuss the matter and has not yet responded to the complaint. A hearing on the arguments in the Bank of America case is scheduled for Jan. 29 in U.S. District Court for the Central District of California.
A.I.G. did not name other banks it would take action against, but it bought mortgage-backed securities from banks that included Deutsche Bank, Goldman Sachs and Bear Stearns, which was acquired during the financial crisis by JPMorgan. Much of the securities were sold to A.I.G. by Lehman Brothers, which collapsed in September 2008.
A.I.G. watchers are intrigued by the newest chapter of the story.
“A.I.G. has a credible claim that they’re pursuing aggressively,” said Michael J. Aguirre, a San Diego lawyer who is representing a California couple who argue the Fed was bilked when it bailed out A.I.G. “The question now is how aggressive the Fed is going to be on pushing back.”
“Is the government going to say, ‘We’re not pursuing these claims, but we’re not going to let anybody else pursue them either — we’re just going to let the banks walk away with fraud profits?’ ” he added.
Although it received relatively little scrutiny, the life insurance part of A.I.G.’s bailout was costlier than the better-known part involving A.I.G.’s Financial Products unit, which sold the notorious guarantees, known as credit-default swaps.
In 2011, A.I.G. tried to buy back the entire pool of mortgage securities from Maiden Lane II, but its offer, about $15 billion, was rejected.
Subsequently other bidders acquired all the assets, and last February the New York Fed announced it had made a $2.8 billion profit on its roughly $20 billion investment in the rescue entity. Terms of the bailout called for it to give one-sixth of any profit to A.I.G.
Maiden Lane II no longer holds any of the mortgage securities and is winding down its affairs.